The IRS has announced a significant shift in how tax refunds will be distributed. Starting September 30th, it will stop issuing paper checks in line with a new federal requirement aimed at transitioning to electronic payments.
The overall tax filing process will remain unchanged, but refunds will now be sent via direct deposits or other electronic means. Interestingly, most taxpayers likely won’t notice much difference. Back in 2025, the IRS processed over 93.5 million tax refunds, with a striking 93% going through direct deposit—meaning only about 7% were mailed as checks.
However, this change also impacts how payments are made to the IRS, and that part seems to be still under development. The agency mentioned that they will share further details before the 2026 tax season kicks off in January.
Why is the tax refund process being changed?
The push for this change revolves around security and cost-efficiency. Research indicates that paper checks are 16 times more likely to be lost, stolen, or altered compared to electronic payments. Plus, using direct deposit helps prevent the possibility of a refund being misplaced.
In addition, electronic refunds provide quicker access to funds. Taxpayers who file electronically and utilize direct deposit will typically see their refunds within 21 days, while mail checks could take over six weeks to arrive.
What should you do now?
For individuals who don’t have traditional bank accounts—like those using prepaid debit cards or digital wallets—there are still a few options available for receiving refunds via paper checks. The IRS plans to keep taxpayers informed about the changes, but until then, they advise continuing to use the existing procedures, especially for 2024 returns that are being filed by the extension deadline of December 31, 2025.
Additionally, you can check out resources like the FDIC’s GetBanked and mycreditunion.gov for free or low-cost banking alternatives.
